Last updated on November 10th, 2021. Posted in Bitcoin Blockchain And Cryptocurrencies.
What is a bitcoin wallet? And which wallet type should you be using to make sure that you and your bitcoin are safe and secure? Well that's exactly what you and I will be discussing here.
Here are links and resources mentioned in today's video. Enjoy!
So what the heck is a bitcoin wallet? Well, I think of it as my bank account. So, a bitcoin wallet is simply a place to store, spend, and receive bitcoin and other cryptocurrencies.
Now that said, there are a few different types of wallets you can use, and depending on what you want to do with bitcoin and other cryptocurrencies you may hold, you'll want to make sure you're using the right wallet type.
Most commonly, you could use what’s called a software wallet. These are sometimes referred to as soft wallets or hot wallets. These are simple applications you’d install on your computer or smartphone to store your bitcoin.
Exodus and Samurai are two examples of soft wallets you could use, although there are many others available.
Another option is to use a hardware wallet, which are sometimes called cold wallets. A hardware wallet is similar to a USB drive with special software installed on it to store your bitcoin and other cryptocurrencies.
Both Trezor and Ledger are top choices if you’re interested in hardware wallets.
Now what's interesting is, you can have as many software and hardware wallets as you want. That said, some security and safety issues to need to be kept in mind.
If you'll be holding more than around $1000 in bitcoin, it's recommended to move that amount to a hardware wallet. That's because hardware wallets are much more secure than software wallets -- they're stored offline, after all.
And that's because, at the risk of getting too far into the technical weeds, the wallet (s) you use store your wallet's private key. Your private key is the secret password that grants access to your wallet.
And a software wallet that's installed on a device that's always connected to the internet runs the potential -- albeit remote -- chance of being hacked.
Further, and again at the risk of getting too technical, here's something else to keep in mind: We think of our bitcoin as being stored inside our software or hardware wallet, right?
Well in fact, your wallet simply provides an easy to use interface to connect with the bitcoins that you own. Where do those bitcoins actually reside? Way down on the blockchain.